Stock futures opened higher on Monday night after a mixed session earlier, as traders waited for a new much-anticipated inflation report.
S&P 500, Dow and Nasdaq contracts were each slightly higher at the start of the overnight session. During the usual trading day, the S&P 500 and Dow rose at each end of five consecutive losing streaks, while the Nasdaq extended last week’s losses.
On Tuesday, traders are expected to receive the Labor Department’s Consumer Price Index (CPI) for August, which is expected to show continued high inflation for consumer goods and services. Consensus economists expect the broadest measure of the CPI to rise 0.4% in August from July and 5.3% from August 2020, according to Bloomberg data. In July, the headline CPI rose 0.5% month-on-month and 5.4% year-on-year, the latter representing the fastest annual growth rate since 2008.
These inflation data, although they are likely to moderate slightly from July levels, are likely to further reinforce the lingering price pressures that trickle down to the recovering economy. Another heightened impression may serve as an additional data point calling into question the view of some Federal Reserve policymakers that inflation will be transient and recede as the recovery matures. Current price pressures have fueled debates about when the central bank will start to gradually reduce asset purchases and other monetary policy adjustments to avoid overheating.
“With the fiscal stimulus waning, real incomes squeezed by soaring prices and supply shortages showing little sign of abating, the Delta variant is far from the only obstacle to economic recovery,” Andrew Hunter, senior US economist for Capital Economics, wrote in a note Monday. “We have long expected GDP growth to slow more sharply in the second half of the year than others had expected, and the risks to our forecast now appear to be biased downward.”
A growing number of economists have suggested that peaks of growth have likely already passed this year, with easy gains in the early stages of the reopening already being made. These valuations coincided with more cautious views on the US stock market for the remainder of the year, with slower economic growth likely translating into slower growth in corporate profits as well. Companies, including Bank of America, have recently reduced their price targets on the S&P 500 and suggested that the index will end the year slightly below current levels.
Others argued that any pullback could present a buying opportunity.
“It’s been constant since the start of the pandemic, to buy on the lows. I certainly don’t see this behavior changing any time soon,” Brian Vendig, president of MJP Wealth Advisors, told Yahoo Finance Live on Monday. “I would always say stay balanced vis-à-vis stocks, but be very selective in making sure that you choose areas that can protect margin, profit growth, and also as a way to guard against unnecessary inflation. . ”
6:10 p.m. ET Monday: Stock futures rise
Here are the main movements on the markets as of Monday evening:
S&P 500 Futures Contracts (ES = F): +6 points (+ 0.13%) to 4,475.00
Dow Futures (YM = F): +41 points (+ 0.12%) to 34,911.00
Nasdaq Futures (NQ = F): +13.5 points (+ 0.09%) to 15,450.25
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck